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Word on the Street is that Blackstone has moved up its IPO pricing to aftermarket on Thursday with trading to begin on Friday. In the wake of news of the Blackstone Bill, people were beginning to wonder whether this much anticipated IPO was going to happen.

The press and other sites have gone over the details of the IPO ad nauseum, so I won't rehash that. If you want to pore over the prospectus online, check it out here at the SEC's site. What you fill find if you look at the news and filings since their original S-1 is that the firm's management are extremely competitive in their personalities. Schwarzman is described as a relentless in the pursuit of success. Interestingly, the firm has filed two "FWPs" or "Free Writing Prospectuses" online. The first one simply highlights and directs the investor to the updated prospectus. The second one copies a Wall Street Journal article and states that it is being filed because of statements made by Mr. Schwarzman, so as not to violate any SEC "quiet period".

I find it interesting because the purpose of the "quiet period" is to make sure that new issues offerings are not being hyped to investors. However, the filing of this news article essentially directs the inquisitive investor to the article, which in my opinion is a bullish piece about Mr. Schwarzman. It is rare to see this type of filing with the SEC. Although I am not sure if this was a calculated effort (to have a nice piece in the WSJ about a week before the IPO, then to file the article with the SEC), I am definitely in awe of the strategy.

Not that the IPO needs hype anyways. If you look at the prospectus, you will find a top notch private equity firm that clearly has ambitions to be the top dog and overshadow even greatest financial institutions in existence.

With regards to the proposed tax changes that would affect the firm, I suspect that either Blackstone will legally maneuver around the rules to avoid excess taxation, or they will become so successful that the extra tax does not matter. It is well within the firm's capability to privatize itself before the 5 year grace period of the proposed Congressional bill. It is also reasonable for the firm, once public, to spin off parts of itself as private.

Now that private equity appears to be coming out of the closet, I am sure that its Capitol Hill lobby will become very fierce. I'm looking forward to the pricing of the IPO and all the subsequent public filings the firm will need to start filing.

As you guys probably know, I'm not buying the IPO. That's not to say it's not going to pop. Good luck to those who are.

By now I'm sure you've all heard about the Blackstone Bill being put forth in Congress. I'm not going to rehash the details about it but in short, the bill would increase Blackstone's tax rate as a public partnership. In the wake of this news, Fortress' stock has taken a hit and it is projected that Blackstone's valuation will be shaved by 15 to 20%.

This is both happy and sad news to me. It's sad that the governing body of this great country clearly has to go after the private equity industry in what appears to be an unjustified outrage over what I consider justified compensation and valuation for private equity firms. In an effort to find more revenue, the IRS needs to pick some deep pockets so it is going after private equity.

I think in the short run, it may work to increase our government's revenue. In the long run, there is no chance in hell that the private equity industry will succumb.

The happy news is that this shows that the people that we have elected to be in Congress and run our government actually are alive and breathing and are not just lame ducks. They are actually trying to increase revenue. Maybe a better idea would be to cut expenses?!

This all reminds me of an old controversy between wealthy democrats and wealthy republicans. The wealthy republican would not be happy that the wealthy democrat was voting for tax increases. The democrat response is that if you are wealthy then it doesn't matter what the tax rates are because you know how to avoid them.

Thus, if our dinosaur of a government wants to come after private equity partnerships, it will always be several steps behind.

I haven't written in this series in a long time, but one of my readers recently asked me to comment on the differences between exit strategies of VCs and Private Equity buyouts. Let me first say that VC firms and LBO shops differ in their strategy and culture.

Some venture firms are old school and want to create long term value while transforming the way the world works. Some venture firms are just about the exit and the ROI and really don't give a hoot about the business other than providing a nice return so they can go out and raise a bigger fund. Similarly, in the buyout world, you have old school corporate raiders in the style of Gordon Gekko that love to carve up companies for the value. You'll also find a lot of very conservative buyout guys that like to build businesses and create value for shareholders. Typically, they will provide a nice piece of equity infusion for the company to then acquire complementary businesses or fund new projects. As you can imagine, the lines may blur between conservative LBO investors and aggressive venture investors. Those venture investors that use debt offerings sure do look an awful lot like conservative growth equity LBO players.

In my opinion, the important difference between the VC and buyout in terms of exit strategy and liquidity is that while both of them have a clock ticking, there is a different expectation, urgency, and ultimate multiple goal between the two. A venture firm must provide returns to its investors and has a long horizon to do so. Therefore, it has to make a high multiple on its investment and must hold out for a nice acquisition or an IPO. So it must build the business from scratch to be able to carrry a very high enterprise value.

On the other hand, a buyout firm, while it does have investors to report to, uses leverage for its transaction so it must pay off its lenders and service debt. Thus buyouts are bank driven deals. A bank won't lend a venture fund money to invest in a startup because it knows that it will probably go down in flames. A bank will lend a buyout fund money because there is collateral in place, and that collateral comes in the form of a company's cash flow and assets. So a buyout fund will seek companies that are undervalued with high predictable cash flow and operating inefficiencies. If it can improve the business, it can sell the company or its parts, or it can pay itself a nice dividend or pay down some company debt to deleverage.

The essential difference is that the venture funded company has little to no debt because it has issued equity. The buyout funded company has issued equity and loaded on debt.

As for the actual exit, a venture fund will usually go for the IPO or acquisition. The highest valuation will usually be what is available on the open market and that is why a venture fund will try that route first. A buyout fund will go for either of those but it also has the option of paying itself out some cash or of selling off parts or of selling in a secondary buyout to another firm.

I hope that answers some questions and feel free to ping me any questions.

If you haven't read today's Deal article, Blackstone has updated their IPO filing. Turns out that Schwarzman made close to $400 mm last year and owns about one quarter of the company which should be valued between $7 to $8 billion after the IPO. Surprisingly, Tony James, who should succeed Schwarzman, made about $100 mm. I hope to have some time to get the scoop before the offering trades. Should be an exciting week.

Pitching your business is not an easy task. I've posted before about The Pitch and if you search the web you'll find lots of great tidbits on how to raise some dough for your venture.

The problem with people talking about pitching is that everybody comes from a different perspective. An investor such as myself will tell you what they want and expect in their presentations. A seasoned entrepreneur will tell you stories of successes and failures. It really is all about the audience. You'll note that the stronger the personality of the audience, the more likely he or she will fire back about his personal pet peeves and annoyances. Hopefully by now, most of you know mine.

I do enjoy reading entrepreneur's perspectives on The Pitch. Mostly because I find it interesting to see how different actions are interpreted. Thus far, I've been lucky enough to not have read any feedback or descriptions of how I've reacted to company presentations.

At any rate, some guys over at BusinessFund.com have posted a nice piece on the topic of how to pitch to a VC or angel. If you're not a big fan of Guy Kawasaki's, then ignore the first reference for the post (yes, it actually has a few references!).

For those of you that follow the LBO world, The Deal reported that Avista Capital Partners tapped its new portfolio company, WideOpenWest LLC, for a $400 mm dividend. If you remember from my previous post about Diamond Castle, Avista is a new firm started by Tom Dean, formerly of Credit Suisse. If you recall, Larry Schloss and his cronies peeled off of DLJ Merchant Banking and Credit Suisse's Alternative Asset Group to start their own shop. The successor to Schloss was Tom Dean, who subsequently jumped ship as well to start Avista.

Well, Avista has reportedly received a handsome dividend from its portfolio company in just under a year and has apparently doubled its investment. I'm kicking myself for not giving Avista's offering more consideration. I will say though that I am happy for the Avista team and I bet they have a nice feeling of vindication with their first liquidity event.

For those of you that don't understand the power of an LBO, this is precisely it. Get into a high cash flow company at a reasonable leverage, grow it and make it more efficient, and when the company is strong and the time is right pay down some leverage or even better, take some profits.

In the private equity world, lifting out and jumping ship to start your own thing is not uncommon. I have always been the one that likes to support those who want to control their destiny. So I definitely get a good feeling when I see the success of a new firm like Avista.

If you haven't heard already, Google has purchased Feedburner. Fred Wilson gives some color to the deal on his blog. While terms were not disclosed, Fred admits that his firm made about 3 times its money on the deal. That doesn't sound like a "homerun" but he clearly outlines how rewarding the investment was for him and his firm in terms of personal satisfaction and in learning about the new media feed world.

This transaction confirms what few prescient VCs have known is the next wave of startups that take advantage of new media. Several years ago no one knew what a widget was or what a feed was. We were all using email and looking at portals and webpages. A very small iteration occurred, and that included the "blog", the "feed", and the "community". In the past few years these have taken off and it remains an undercapitalized investment category simply because a lot of VCs don't understand the power of this space.

Now some would argue that these aren't new concepts after all. The original webpage is basically a blog. A feed is basically a piece of directed spam. And a community is simply the readers of a portal.

So what exactly has changed? In my mind, the main thing that has changed is that savvy entrepreneurs have figured out a way to provide "turnkey" solutions for the masses. Now you could very well argue that software had already been created to provide this turnkey solution. However, those solutions never took off in the past like they have today. I believe the reason is because these solutions now come in SaaS "Software as a Service" models - no software on the computer - everything online.

I'm still bullish on these new media companies run by very smart people that are very low cost to build and scale. These companies use viral marketing to spread like wildfire. And they get gobbled up by giants soon after their popularity grows.

The best thing about them is that they essentially become successful in the same way that most companies get successful - they package a turnkey product and make it available for the masses.

There have been various follow up questions to my posts on making a Due Diligence Binder and making business plans in general. In an attempt to help out entrepreneurs who continue to send me business plans and put in my two cents about what I like to see at monthly or quarterly business meetings, here are my thoughts on the matter.

Far too often I see a plan that is heavy on "mission" but very thin on "metrics." In my opinion, a good business plan will have both a micro and macro analysis. Most business plans have lofty projections of revenue and profits. What they don't always have is a clear outline of the important metrics relevant to your business. This is a basic concept that is far too often overlooked.

In a sales business, it is obvious that product sales are the main metric. In a food business it is probably meals served. In a laundry business it is turns per machine. Whatever your business is, clearly define what metrics are relevant to measure and gauge the growth and trajectory of your business.

I like to call that "macro" analysis within a business or business plan. What I refer to "micro" analysis is an analysis of the business and its margin on a dollar basis. I think it is a very elegant thing when a business plan contains a simple diagram that shows $1.00 of revenue and how that dollar is split between various expenses and profits. I quite honestly only see this type of thing from business plans from serial entrepreneurs. It's surprising because typically a sophisticated entrepreneur will come up with profit margins and excel spreadsheets showing these margins based on business projections. It is nice if you can simplify this down to a single dollar analysis. f you can show me where that $1.00 goes, I can see clearly what the margin is like and how much of that goes to the bottom line.

When it comes to updating your Advisory Board, please define your goals and objectives in relation to those metrics. While it may seem elementary, I support the use of basic Goals & Objectives formats or some variation thereof. When I go to an Advisory Board meeting, I expect the package and update to contain a set of previous Goals of the business overall the last quarter and future quarters. The specific objectives need to be revisited to see if they were achieved. If they were or were not, some time should be spent on an analysis of the success or failure.

I feel that time in an Advisory meeting should be spent first reviewing progress on the G & O. Then time should be spent on strategizing how to improve on both the "macro" and "micro" metrics. Thus, time should be spent on how to grow the business and on grow the margins.

In this day and age of snazzy and jazzy business plans, it is important to keep these basic thoughts in mind. Investors and Advisors want a transparent and simple way to gauge the health of a business. If you cloud it with smoke and mirrors you'll only be doing yourself a disservice.